Timeline of Financial and Mortgage Related News
- The Government of Canada announced that it will be extending the Canada Emergency Response Benefit (CERB) by an additional 8 weeks, to support Canadians who are still out of work. The Canadian Government is, however, encouraging Canadians to return to work (when it is safe to do so) and continue to look for new work as our economy continues to reopen.
- The Canadian Government announced that as of Friday June 19th they will begin accepting applications that allow more Canadian businesses to access the Canada Emergency Business Account. For more information visit: https://www.canada.ca/en/department-finance/news/2020/06/more-small-businesses-can-soon-access-the-canada-emergency-business-account.html
- The “Business Resilience Service” hotline is launched. In an effort to support small businesses facing financial challenges amid the Covid-19 Pandemic, small business owners with pressing financial needs can call 1-866-989-1080 (toll-free) seven days a week, from 8 a.m. to 8 p.m. (ET). The service is meant to help entrepreneurs and small business owners in need of financial planning advice, particularly those who may not have access to an accountant. From www.canada.ca: “Business advisors—125 members of Chartered Professional Accountants Canada (CPA Canada)—will be available to provide customized financial guidance to the smallest business owners in the most urgent need and help them make the best decisions for their business as they navigate this crisis. Advisors can answer questions about tax regulations and the implications of COVID-19, inform business owners about government support programs that best fit their unique circumstances, and provide strategic financial planning for their road to recovery.” For more information visit: https://www.canada.ca/en/innovation-science-economic-development/news/2020/05/minister-ng-announces-hotline-to-provide-small-businesses-in-need-with-financial-planning-advice-amid-covid-19.html and https://www.canadianbusinessresiliencenetwork.ca/brs/
- Eligible Canadian families currently receiving the Canada Child Benefit (CCB) monthly payment will receive an increased one-time increase today of up to $300 per child for their May payment.
- With the extended tax filing deadline of June 1st, CRA will not be re-assessing benefits before September. Benefits will continue to be calculated based on 2018 tax information and will be re-calculated in September 2020.
- Visit Canada.ca’s benefits page for more information
- Eligible Canadians who are currently receiving the GST/HST credit and/or Canada child benefit (CCB) payments will continue to receive these payments until the end of September 2020. Benefit payments starting in July 2020 and those scheduled for August and September won’t be interrupted.
- Government extends the Canada Emergency Wage Subsidy
- Canada Revenue Agency starts accepting applications from eligible employers for the Canada Emergency Wage Subsidy (CEWS). This financial aid benefit is available to eligible Canadian employers whose businesses have been affected by Covid-19, and will provide a subsidy of 75% of employee wages for up to 12 weeks, retroactive from March 15th, 2020 to June 6, 2020. For more information visit the Government of Canada website here.
- Prime Minister Trudeau announces $9 Billion in financial support for students & recent graduates. Students will be eligible for $1,250 per month from May through August, 2020, and up to $1,750 per month if the student is caring for a dependent or has a disability. This benefit has been put in place to help alleviate financial strain on students who would normally go back into the workforce for the summer but may find it difficult to obtain work due to unemployment rates. There is also a benefit for students to volunteer over the summer.
- For the first time in History, the price of oil turns negative. For more information, CBC News covers the story here.
- The Government of Canada starts accepting applications for the Canada Emergency Response Benefit (CERB) which is a weekly financial aid payment available to Canadians who have suffered job/income loss due to the Covid-19 Pandemic. For more information and applications for the CERB click here.
- B.C. officials announce that there are some early signs that the Province is slowing the growth of the number of cases of Covid-19, but that its far too early to relax social distancing measures.
- Canada announces an investment of $100 million to imporove access to food for Canadians facing social, economic, and health impacts of the Covid-19 Pandemic.
- Canada Revenue Agency published information on the Deferral of GST/HST Remittances.
- Bank of Canada lowers the overnight rate to .25%, down by another .5%. Questions from the media are surfacing about the possibility of negative interest rates.
- In his morning announcement, PM Justin Trudeau announces additional aid for small and medium sized businesses, including up to 75% wage subsidies and interest free loans for 1 year.
- After stocks rally for a few days, the financial markets fall again amidst economic uncertainty.
- House of commons passes legislation for an $82 Billion dollar aid package to help Canadians through the Covid-19 crisis. Read more here.
- Staggering reports of job losses due to Covid-19. Read more from the National Post, here.
- Fixed and variable interest rates are up. Banks raised rates due to liquidity concerns and an overwhelming amount of mortgage applications flooding their systems.
- Ontario and Quebec have shutdown all business deemed non-essential.
- The Canadian government made amendments to “allow mortgage lenders to pool previously uninsured mortgages into National Housing Act Mortgage-Backed Securities (NHA MBS) for CMHC to purchase these securities through the recently announced Insured Mortgage Purchase Program.”
- This includes mortgages for refinances and those with 30-year amortizations, both of which are presently excluded from government-sponsored securitization.
- These mortgages must have closed before March 20, 2020 and be default insured by the lender to qualify.
The government says, “The above amendments will remain in force until December 31, 2020, at which time the eligibility criteria will revert to the existing rules. “
- Nearly every long-time mortgage broker is swamped, with some saying they’re having their highest application volume ever for a March.
- People are using HELOCs to buy stocks. These are hopefully well-qualified, risk-tolerant clients with financial safety nets. It’s definitely not a strategy for the overwhelming majority. Nevertheless, buying diversified dividend-paying stocks in an unregistered account with 2.95% interest-only tax deductible payments and a 10+ year time horizon, if suitable for the individual, can sometimes make sense.
- (Note: This is not a recommendation or advice of any kind. Consult a licensed financial advisor before considering any such strategies and never buy stocks with borrowed money unless you can afford to lose it all.)
- Condo Fee Deferral: Even some condo boards are letting homeowners defer payments.
- CMHC has provided increased flexibility to defer mortgage payments on its insured homeowner mortgage loans, which means lenders are now able to defer payments on a borrower’s CMHC-insured mortgage up to six months without CMHC’s approval.
- Borrowers should speak to their lenders directly by going through their default management department to confirm if they are eligible for this deferral and the terms and conditions for resuming their payments.
- “Open houses are quickly becoming extinct,” notes Royal LePage CEO Phil Soper
- Lenders are being overloaded with calls from borrowers trying to defer their mortgage payments.
- Wait times are hours in some cases.
- Some borrowers are even lying about losing their jobs, according to lenders. Hence, some deferral requests are being declined.
- Remember: mortgage payment deferral is largely at the lender’s discretion and each lender’s policies are somewhat different.
- The Bank of Canada bought another $305 million in Canada Mortgage Bonds today. That’s helping liquidity somewhat, which helps keep mortgage rates lower than they otherwise would be.
- The gap between the best 5-year fixed and variable rates is fluctuating wildly as rates change. As we speak, it’s over half a point. In other words, you’ll pay a 50-basis-point premium for a 5-year fixed rate today. That boosts the upfront rate advantage of variables—particularly given we’re heading into a recession, one in which prime rate should fall further. But as more lenders slash their variable rates, this advantage could evaporate quickly.
- TD Boosts Variables: Canada’s second-biggest mortgage lender has raised the advertised specials.
- Decimation: Stocks of mortgage companies have been cut in half:
- Home Capital: Down 54% from November high.
- First National: Down 55% from November high.
- Yields Soar: Canada’s 5-year bond yield launched 13 bps today as investors sold everything that wasn’t nailed down, including stocks and bonds, and rushed into cash. Rocketing bond yields are bullish for fixed mortgage rates and we’re seeing more lenders, including banks, react by lifting fixed rates again today.
- The Finance Minister says he’ll do “whatever it takes” to help the country cope with COVID-19’s financial hit.
- Measures announced today include deferring tax payments “until after August 31, 2020.”
- Policy-makers are doing a tremendous job providing emergency liquidity to mortgage lenders. So far, it’s working reasonably well. But, friction in the funding market is nonetheless forcing mortgage rates higher at most lenders.
- Amid higher risk/liquidity premiums in the funding market and yesterday’s surge in bond yields, RBC has raised its “special” fixed mortgage rates by up to 40 bps.
- Big banks plan to defer people’s mortgage payments up to six months, something that’s virtually unheard of.
- The story. Default insurer CMHC will allow 6-month deferrals as well, on insured mortgages. “We are also exploring, with others, potential relief measures for those who cannot make payments on uninsured mortgages and renters,” said Evan Siddall, president and CEO of CMHC (Source: CBC).
- BMO, CIBC, National Bank of Canada, RBC, Scotiabank and TD Bank said they are allowing mortgage payment deferrals for up to six months as part of extraordinary measures to help borrowers struggling with the financial impact of the COVID-19 health emergency.
- Trudeau on Mortgage Aid: The Prime Minister said today that it’s possible the government will set up a program to help Canadians adversely impacted by the coronavirus with their mortgage payments.
- TD cut its posted variable rates by 50 bps today to match the drop in prime.
- CIBC also lowered its posted variable rates by 50 bps.
- Bank of Montreal left its advertised variable rates effectively unchanged.
- RBC Shaves Variable Discount:The nation’s biggest mortgage lender and rate trendsetter has increased its special variable rate from 2.85% to 2.95%. More importantly, it has boosted its posted 5-year open variable rate from prime + 2.00% to prime + 2.50%.
FRIDAY MARCH 13TH:
- The Bank of Canada slashed interest rates Friday for the second time this month, a move that came as sentiment had begun to darken in the country’s real estate market with the spread of the COVID-19 crisis.
- The federal banking regulator and finance department suspended changes to the mortgage stress test that would have made it easier for borrowers to qualify for a bigger loan.
- The central bank made its surprise interest rate cut to 0.75 per cent, from 1.25 per cent, less than two weeks after it cut the level from 1.75 per cent, which triggered a frenzy in the mortgage market, with homeowners and buyers taking out new loans, refinancing, renewing and breaking their old mortgage contracts.